Election's biggest loser: Karl Rove

Date: November 09 2012

Julie Bykowicz and Alison Fitzgerald

Karl Rove and his investors were the biggest losers on US election day.

The Republican strategist created the model for outside money groups that raised and spent more than $US1 billion ($960 million) on the November 6 elections – many of which saw almost no return for their money.

Rove, through his two political outfits, American Crossroads and Crossroads Grassroots Policy Strategies, backed unsuccessful Republican presidential contender Mitt Romney with $127 million on more than 82,000 television spots, according to Kantar Media's CMAG, an ad-tracker based in New York.

Ten of the 12 Senate candidates and four of the nine House candidates the Rove groups supported also lost their races.

The results have angered some Republicans who blame Rove for "sidelining conservatives" and diverting money from them.

"Right now there is stunned disbelief that Republicans fared so poorly after all the money they invested," said Brent Bozell, president of For America, an Alexandria-based non-profit that advocates for Christian values in politics. "If I had 1/100th of Karl Rove's money, I would have been more productive than he was."

Trump criticism

Donald Trump posted a message on Twitter saying: "Congrats to @KarlRove on blowing $400 million this cycle. Every race @CrossroadsGPS ran ads in, the Republicans lost. What a waste of money."

Rove argued that Romney lost in part because President Barack Obama outspent him on TV when outside groups are taken out of the equation.

"This shows that money does matter in politics," Rove said on Fox News, where he is a paid commentator. In hindsight, Romney should have used his resources to defend himself because that isn't the strong suit of groups like Crossroads, Rove said.

Obama aired more than twice as many ads on local broadcast and nation cable TV as Romney during the general election, according to CMAG. However, when outside groups such as the ones Rove steers are added in, each side had about the same number of ads on TV.

$176 million

The election day results showed Rove's strategy of bringing in huge donations from a few wealthy benefactors and spending that money almost completely on television advertising failed. The Centre for Responsive Politics estimates the two Crossroads groups spent about $176 million, making them the top non-candidate and non-party spender of the election. Rove has bragged of raising more than $300 million for his groups.

American Crossroads, a super-political action committee, discloses its contributors and spending to the Federal Election Commission. Its affiliate, Crossroads GPS, is organised as a non-profit social-welfare group that conceals its donors and reports only a fraction of its political activities.

"If the rule in politics is you win or lose by the election results, Karl Rove is a big-time loser in the 2012 presidential and congressional races," said Fred Wertheimer, president of Democracy 21, which advocates for limits to campaign spending.

Still, "Karl Rove certainly knows how to make a lot of money for political consultants and TV stations", he said.

"Poor return"

Democrats piled it on. "If Crossroads were a business, and Rove was the CEO, he'd be fired for getting a poor return on his investment," New York Senator Charles Schumer, the chamber's third-ranking Democrat, told reporters at a Christian Science Monitor breakfast.

The return on investment for American Crossroads donors was 1 per cent, according to an analysis by the Sunlight Foundation, a Washington DC group that advocates for open government. The group calculated the number based on how much of the money was spent supporting winners.

For donors to sister-organisation Crossroads GPS, the success rate was 13 per cent, the group said. That's a lower return than for donations to the National Republican Congressional Committee and to the two major Democratic congressional super-PACs, according to Sunlight.

Homebuilder's Money

Houston homebuilder Bob Perry gave $7.5 million to Rove's American Crossroads and another $8 million to Restore Our Future, a super-PAC that supported Romney. He also gave $1 million to Independence Virginia, a super-PAC that backed former Republican Governor George Allen in a U.S. Senate race. Allen, with 47 per cent support, lost to another former governor, Democrat Tim Kaine, who won 52 per cent of the vote. Even after the losses, Perry spokesman Anthony Holm said the super-donor has no regrets.

"Bob Perry will always support efficient government and pro-liberty and opportunity agendas, always," Holm said in a telephone interview. "He was proud to do it this election cycle and is likely to continue into the next cycle."

The Crossroads groups spent $10.2 million in an effort to oust Ohio Democrat Sherrod Brown from the Senate, and overall outside groups spent much more. Brown beat his opponent, State Treasurer Josh Mandel, 50.3 per cent to 45.1 per cent, with an independent candidate winning 4.6 per cent of votes cast.

"His brand of politics is pretty discredited," Brown said of Rove on a conference call. "He thought spending $40 million against me and against the president would bring us down."

Ohio Loss

Rove was particularly upset about Romney's Ohio loss. A former adviser to George W. Bush, he was acting as a commentator on Fox News when the network called the state for Obama. Rove, on air, said he didn't believe it. He continued to argue with the newscasters while shuffling through papers and calling Ohio's secretary of state and Romney's campaign manager for more information.

"This is premature. We've got a quarter of the vote (outstanding)," he said. Fox didn't withdraw its Ohio call for Obama and neither did other networks – predictions that ultimately proved true when the final votes were counted.

Rove's groups spent $11.4 million in their bid to defeat Kaine in Virginia. They spent $7.76 million trying to unseat Florida Senator Bill Nelson, according to CMAG. Nelson, a Democrat, held his seat as well. The CMAG estimates are for ads on broadcast TV and national cable from April 10, 2012 through the day before the election.

The Crossroads groups bet successfully – although less than $200,000 – on Republican Deb Fischer to win an open seat in Nebraska.

Split decision

On the House side, Rove scored wins in five of nine races. Among those winners was David Valadao of California's 21st District, where Crossroads GPS spent $437,390, and Republican Tom Latham who beat Democrat Leonard Boswell in Iowa with the help of $432,640 from Crossroads, according to CMAG.

Serving as a Democratic counterweight to Rove was Bill Burton, a former Obama aide who left the White House to form Priorities USA Action. That super-PAC raised and spent about $67 million – a fraction of the budgets for the pro-Romney groups that carried a 100 per cent return with Obama's re-election victory.

Questions ahead

"There will be a lot of questions raised about just how much bang for their buck Republicans got out of super-PACs," Burton said. "Billionaires on the Republican side are probably wondering what difference their contributions made in this election."

He said he spoke with many of his own large donors today and described them as "ebullient".

Majority PAC, which aided Democratic Senate candidates, spent about $37 million, and 70 per cent of that money was used in successful elections. House Majority PAC backed Democratic congressional candidates with $31 million; 44 per cent went into winning races, the Sunlight study found.

Other groups emulated the Rove approach, bringing at least $306 million of untraceable donations into the 2012 races, according to the Center for Responsive Politics.

Americans for Prosperity, founded 10 years ago by industrial billionaires David and Charles Koch, didn't have much of a better night than the Rove groups.

The nonprofit group raised and spent $140 million this year, President Tim Phillips said in an interview.

Playing Field

It bought about $34 million in TV ads attacking Obama and urging people to vote him out. Its $14 million purchase of TV ads in Senate races also turned up few victories.

"We levelled the playing field, but we weren't quite able to get it done," he said.

The largest chunk of the money, $1.2 million, went into the Wisconsin Senate race, according to CMAG.

"Have you seen Tammy Baldwin's voting record?" a woman asks with disgust in a spot than ran about 800 times last month. Baldwin, the Democrat, won last night

The group also spent $622,400 on ads attacking Nelson in Florida, $513,000 on McCaskill in Missouri, $486,000 on Kaine in Virginia, $466,000 on Joe Donnelly in Indiana and Jon Tester in Montana. Those Democrats all won.

AFP made $754,000 in ad buys in Nebraska and Nevada and saw its preferred Republican candidates win in those races.

Phillips said the group is in politics for the long haul, and compared Republicans with Democrats in 2004, when they lost the White House, yet went on to win Congress in 2006 and the presidency in 2008.

Emulating Soros

Phillips has said he is modelling the group after voter-turnout efforts billionaire investor George Soros made in 2004. Soros put up $24 million – at the time a record – in a failed effort to defeat Bush.

"George was certainly disappointed at Bush's victory in 2004, but he did not feel that he had made a mistake," said Michael Vachon, his spokesman. "He felt he acted out of his conviction that Bush was leading the country in a dangerous direction."

Soros, however, pulled back on his political activities after the loss. It remains to be see whether rich Republicans will come back for another round after these results.

Sheldon Adelson, whose family's $53.4 million investment in federal candidates and outside groups made him 2012's top donor, didn't give money to American Crossroads. Yet he, too, saw his preferred elected officials swept away. Adelson, the 25th richest person in the world according to the Bloomberg Billionaires Index, is head of Las Vegas Sands Corporation, the world's largest casino company.

While leaving Romney's post-election party in Boston last night, Adelson was asked by a Norwegian television reporter how his political donations were spent.

"By paying bills," he said.

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